Sequential Brands Group, Inc.
Q3 2020 Earnings Call Transcript

Published: 16 Nov 2020

[Operator:]

Greetings. Thank you and good afternoon. Before we begin, I'd like to bring to your attention that statements that are not historical facts contained in this conference call are forward-looking statements that involve a number of risks, uncertainties and other factors, all of which are impossible to predict and many of which are beyond the control of the company. This may cause the actual results, performance or achievements of the company to materially differ from the results, performance or achievements expressed or implied by such forward-looking statements. We refer you to our public filings and the press release we issued this afternoon for a summary of such factors. The words believe, anticipate, expect, may, will, should, estimate, project, plan, confident or similar expressions identify forward-looking statements. Listeners are cautioned to not place undue reliance on these forward-looking statements, which may speak only as of the date the statement was made. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, whether as a result of information, future events or otherwise.

[William Sweedler:]

Thank you for joining our third quarter 2020 earnings call. I'm pleased to join you today. The team and I have been hard at work to best position Sequential for short and long-term success; and I have a few updates I wanted to share on our progress. First, while the pandemic continues to impact the business and the industry overall, we've been fortunate that some of our brands have performed well given the recent tailwinds supporting a healthier, more active, fit lifestyle. The AND1, Gaiam, Spy and Avia brands have proved resilient and have performed well at key retail partners, including Amazon, Kohl's, Walmart and Target. In addition, we continue to explore opportunities across the entire lifestyle and active portfolio to expand our brands into new categories and territories. On a GAAP basis, through continued hard work, managing expenses and working closely with our licensing partners, income from continuing operations for the third quarter 2020 was $4.5 million or $2.71 per diluted share. I'm proud of the team and all of their efforts to deliver our first profitable quarter this year. Second, I wanted to take a moment to recap management changes. I have assumed the role of Executive Chairman and Principal Executive Officer replacing the CEO position going forward. I want to thank former CEO, David Kahn, who recently departed the company. Chad Wagenheim remains President and will continue to work closely with me. I'm also excited to share that Lorraine DiSanto has joined the company as our new Chief Financial Officer. She brings over 30 years of accounting, finance and operational experience. Previously, she was CFO of Herman Miller Group's retail segment and prior to that she served as CFO of Design Within Reach. Dan Hanbridge, he joins me on today's call, is with us through the middle of the month and then will move on to a new role. We are grateful to Dan for stepping into the Interim CFO role and wish him well with his future endeavors. Third, as briefly mentioned earlier, our team continues to closely manage costs and take steps to maximize our liquidity. We recently signed an agreement to immediately exit our remaining lease obligation from our previous corporate headquarters, which results in a significant savings over the next several years.

[Dan Hanbridge:]

Thank you, Bill. Total revenue from continuing operations for the third quarter ended September 30, 2020 was $24 million compared to $25.4 million in the prior year quarter. On a GAAP basis income from continuing operations for the third quarter 2020 was $4.5 million or $2.71 per diluted share compared to loss from continuing operations for the third quarter 2019 of $18.4 million or $11.31 per diluted share. Non-GAAP net income from continuing operations for the third quarter 2020 was $2.1 million, or $1.30 per diluted share, compared to a non-GAAP net loss of $0.9 million or $0.53 per diluted share in the prior year quarter. Adjusted EBITDA from continuing operations for the third quarter of 2020 was $18.9 million compared to $13.2 million in the prior year quarter, reflecting the company's continued efforts to reduce expenses. Total revenue from continuing operations for the nine months ended September 30, 2020 were $66.8 million compared to $77.3 million in the prior year period. On a GAAP basis, loss from continuing operations for the nine months ended September 30, 2020 was $83.8 million or $50.96 per diluted share compared to $26.4 million or $16.36 per diluted share for the nine months ended September 30, 2019.

[Operator:]

Thank you. Ladies and gentlemen, this concludes our call for today. Thank you for your participation and interest. You may disconnect your lines at this time and have a wonderful day.

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